How Colleges Are Working With Private Loan Lenders After the Elimination of Graduate PLUS Student Loans

Starting in the 2026-27 academic year, new graduate students in the U.S. will lose access to Graduate PLUS loans, prompting colleges to partner with private lenders to fill funding gaps. Schools like Midwestern University are expanding scholarships, lowering credit score requirements for institutional loans, and entering risk-sharing agreements with lenders to ensure students can continue their studies." "article": "Graduate schools in the U.S. are forming partnerships with private lenders to address a funding shortfall caused by the elimination of Graduate PLUS loans for new graduate students beginning in the 2026-27 academic year. The loans, which previously covered costs after federal aid, will no longer be available to new borrowers, leaving some students—particularly those in medical programs—with limited borrowing options. Financial aid offices are expanding their preferred lender lists and negotiating risk-sharing deals to mitigate the impact. Private lenders report increased outreach from colleges seeking loan options, as schools proactively explore ways to accommodate students. Ray Jones, chief product officer at the South Carolina Student Loan Corporation, noted that colleges are now more engaged in discussions with lenders to adapt to the changes. Midwestern University, a private graduate healthcare school, has responded by lowering its minimum credit score requirement for institutional loans from 680 to 660 and expanding scholarship and loan offerings. Gregory O’Coyne, vice president of enrollment and financial strategy, stated that nearly all students faced funding gaps, leading to a tripled number of loan applications. The university has also adjusted financial aid packages to address the shortfall. Some institutions are entering risk-sharing agreements with private lenders, where schools partially cover defaults if borrowers struggle to repay. Ascent, a private student loan provider, has previously partnered with universities under these programs. Ken Ruggiero, co-founder of Ascent, emphasized a collaborative approach, allowing lenders to fund loans while schools focus on education. The shift reflects broader adjustments in private lending, as lenders adapt to the loss of Grad PLUS loans by offering alternative financing solutions. While federal options remain for existing borrowers, new graduate students will rely more heavily on private loans or institutional aid to bridge funding gaps.